April 15 is tomorrow the due date for individual tax returns. Did the amount due on your federal taxes catch you by surprise this year? This can be especially disheartening in a year with a net worth decline due to your investments decreasing in value. While you can easily lay your hands on a copy of your 2008 return take a few minutes to look it over. Do you have any questions that need to be answered by your tax preparer (which may be you) in order to be better prepared next year if you feel you were not this year?
What is your highest tax rate? This is an important number to know for tax planning and investment analysis. Are there any areas where you could be overlooking tax benefits? What plans could you put in place to reduce your taxable income for 2009? Now is a good time to create a plan while you have income taxes fresh on your mind. Write out your questions and ideas today and act on them as soon as possible. Since the O’Bama administration plans to increase taxes even if your income stays the same your taxes could increase.
If you are unsure where to begin or what questions to ask there are numerous books on the topic that are easy to read. One of my favorites is Lower Your Taxes – Big Time by Sandy Botkin CPA. Many CPA’s do not make suggestions to lower your taxes or may not be aware of your circumstances that could create a tax benefit therefore it is important to have a very basic understanding of your tax situation. 2009 may just be the year you officially create a small business you have been thinking about for years from that hobby or passion thereby creating some additional income and legitimate business expenses.